Comino v Manettas; Cooney v Manettas

In *Comino v Manettas; Cooney v Manettas*, the New South Wales Court of Appeal considered appeals arising from a dispute concerning the sale of a business. The appellants, Comino and Cooney, were purchasers of a restaurant and associated business, while the respondents, Manettas, were the vendors. The central issue revolved around whether the vendors had breached their contractual obligations by failing to disclose certain information to the purchasers prior to the sale.

The court was required to determine whether the vendors had breached express or implied terms of the contract of sale, specifically in relation to the disclosure of the business's financial performance and the existence of a significant debt owed by the business. The purchasers alleged that the vendors had misrepresented the profitability of the business and had failed to disclose the extent of its liabilities, leading them to enter into the contract under a mistaken belief.

The Court of Appeal found that the vendors had not breached any express terms of the contract. However, it held that there was an implied term that the vendors would not mislead or deceive the purchasers regarding the financial state of the business. The court reasoned that the vendors' conduct, in failing to disclose the substantial debt and presenting a misleading picture of profitability, amounted to a breach of this implied term. This breach was found to be material, as it induced the purchasers to enter into the contract.

Consequently, the Court of Appeal upheld the purchasers' appeals, finding that the contract was voidable due to the vendors' misrepresentation. The court ordered that the contract be rescinded and that the purchasers be repaid the purchase price, subject to certain adjustments for the period they had operated the business.